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Bombardier union seeks to block sale of Toronto facility

A Bombardier Q400 NextGen turboprop airliner sits under construction in one of the hangars at the Bombardier Aerospace plant at Downsview airport, in Toronto on Tuesday, April 6, 2010.

Norm Betts/Bloomberg

Bombardier Inc.'s plan to sell a manufacturing plant on a coveted piece of land near Toronto is running into opposition from the company's own employees.

Unifor, the union that represents about 2,000 production and office staff at the Downsview facility, is lobbying government officials to reject any requests for a re-zoning to allow residential development, which would make it easier for Bombardier to find a buyer. Downsview, where the company assembles Global 6000 business jets and Q400 turboprops, is now restricted to industrial use.

"We don't want to move,'' Scott McIlmoyle, president of Unifor Local 112, said in a telephone interview. "Our position is that we're going to do everything we can to keep our members and our work right there. We have a responsibility to look after our members.''

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Chief Executive Officer Alain Bellemare is seeking to sell Downsview as he steps up efforts to increase cash generation at the debt-laden maker of planes and trains. Canada's biggest aerospace company has hired advisers to find a buyer for the property and is looking at scenarios that include relocating production near the city's Lester B. Pearson International Airport.

Underutilized asset

Bombardier said in January it had begun reviewing options for Downsview because it uses only about 10 percent of the 150-hectare (375-acre) site and bears the entire cost of operating a two-kilometer (7,000-foot) runway. Downsview is "an amazing piece of land,'' Bellemare said Feb. 15 on a conference call with analysts. "It's an underutilized asset. We can do the same type of work somewhere else and really unlock huge value."

Efforts to sell the property are underway and the Montreal-based company hopes to complete a deal "relatively quickly in 2018,'' Bellemare also said last month. He didn't elaborate on possible financial terms.

Selling Downsview would buoy Bellemare's efforts to strengthen Bombardier's balance sheet, following an announcement last week that the Montreal-based company planned to raise at least C$638.4 million ($498 million) in equity. Bombardier is saddled with about $9.2 billion of debt after investing in research and development of new aircraft such as the C Series commercial jetliner and the Global 7000 private jet.

Downsview could fetch as much as $1 billion, a "wild card'' that would add "upside'' to Bombardier, Cowen & Co. analyst Cai von Rumohr said in a note to clients Feb. 20.

Residential option

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Potential bidders could be developers that want to build residential buildings there because it's near a subway station, though city officials may not be keen on replacing the employment land with condominium towers, Ed Sonshine, CEO of RioCan Real Estate Investment Trust, said in a recent interview. Sonshine, who was approached about the property last year, said he wasn't interested.

"There's probably only half a dozen players that can handle it, and again, it's a fairly long term deal, it's a massive deal and there's a lot of issues with it," he said. "I think it'll all get sorted out and I think somebody will buy it, but all these issues do is impact value."

Bombardier advised Unifor late last year that the company wanted to sell Downsview and consider a move, McIlmoyle said. Pearson is the company's "preferred option,'' he added.

Moving production to Pearson represents "one option, and we're looking at all the options right now,'' Simon Letendre, a Bombardier spokesman, said in a telephone interview. "There is a lot of interest in Downsview because of its location.''

Jet production

Asked about Downsview's status, Letendre said it would be up to the buyer to obtain permission for a zoning change. "Our priority is to extract the value from this land, and to make sure there is no interruption in production,'' he said.

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In the meantime, Unifor is lobbying city, provincial and federal government officials to preserve Downsview's designation as an industrial site. About 3,500 people currently work at the Bombardier facility.

Bombardier's collective agreement with Unifor Local 112 expires in June. The deal calls for Bombardier to perform final assembly of the Q400 and the Global 5000 and 6000 business jets at Downsview. Workers at the site have recently begun assembling the ultra-long-range Global 7000, Bombardier's next big revenue generator. Deliveries of the jet are due to start in the second half of 2018.

Airbus is buying a majority stake in Bombardier's C Series program and assembling the plane in the U.S. to avoid import duties. Bombardier CEO Alain Bellemare says the partnership will mean an increased production of planes. The Canadian Press
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